Entries in Phil Angelides
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Photo Courtesy - Getty Images(WASHINGTON) --The financial crisis was avoidable, and government regulators and financial corporations missed key warning signs which could have staved off the crisis. That's the conclusion from the first official government report on the cause of the financial crisis released by the Financial Crisis Inquiry Commission.

“This financial crisis could have been avoided. Let us be clear. This calamity was the result of human action, inaction and misjudgment, not of mother nature or computer models gone haywire,” chairman Phil Angelides said. “The captains of finance and the public stewards of our financial system ignored warnings and importantly failed to question and understand and to manage the evolving risks in a financial system that is so essential to the well being of our country. Theirs was a big miss, not a stumble.”

The FCIC report comes six months after Congress implemented regulatory legislation to respond to the crisis before the commission was able to conclude their investigation.

“I don’t think we chose to take our work and shape it for Dodd-Frank at all,” commissioner John Thompson said. “Our task was to identify the causes of the financial crisis, not necessarily to fit our investigation into a piece of legislation that might have evolved, so it was more circumstance that legislation evolved during the same period of time that we were doing our investigation.”

Commission members hope the report will act as a “guidepost” for future legislation.

The report assigns blame for the financial meltdown across the financial spectrum from government regulators to Wall Street executives who allowed risky behavior to occur.

The FCIC concluded the crisis stemmed from widespread failures in financial regulation; dramatic breakdowns in corporate governance and risk management; a government ill-prepared to handle the financial crisis; corporation’s adoptions of risky trading and borrowing practices; and a breach of accountability and ethics.

According to the report, government regulators and corporations missed key warning signs ranging from an influx in risky subprime lending and securitization and growth in financial firms’ trading activities to a steady rise in housing prices and the adoption of predatory lending practices. The report points to the Federal Reserve’s inability to stem the toxic flow of mortgages as a prime example of a missed warning sign, arguing the Fed ignored its ability and responsibility to strengthen mortgage-lending standards.

The 633-page report details the lead-up to the financial crisis, the boom and bust of the mortgage industry, the demise of major financial institutions, such as Bear Sterns, Lehman Brothers and AIG, and the aftermath of the crisis, which has left the economy struggling to recover from a severe recession.

The commission is obligated by Congress to refer any potential violations they discovered over the course of the investigation to the appropriate authorities, and Angelides said they did uphold this obligation and referred potential violations to the authorities. He declined to comment on how many or what kinds of violations were uncovered.